I appreciate the opportunity to be here with the Committee today to discuss one
of the most important areas of space policy - space transportation.

The Clinton Administration has made science and technology a high priority item
on the national agenda. Our national space transportation capability is a
fundamental part of pursuing science and technology in the national interest,
whether it be national security, communications, or science and technology for
environmental studies. The Administration's new launch policy recognizes this
and builds a firm foundation for the U.S. future in space, in the context of a
dynamic and complex global marketplace.

Space policy is an important topic in the National Science and Technology
Council (NSTC), which incorporated the functions of the National Space Council.
As I am sure you know, the Administration has been and continues to a be strong
supporter of the International Space Station. In addition to the Space Station,
the NSTC has been at the center of several other space issues, including three
major statements of space policy: Convergence of U.S. Polar Weather Satellite
Systems (May 5), Landsat Remote Sensing Strategy (May 5), and most recently the
National Space Transportation Policy (August 5).

These policy statements have been part of the Administration's broad effort to
reinvent government, consolidating and streamlining federal programs while
allocating clear lines of responsibility, and promoting economic
competitiveness. Post-Cold War realities are creating new opportunities
for both competition and cooperation and we seek to ensure that the
United States benefits from those opportunities.

The Administration's space transportation policy sets a clear course for the
launch policy part of the nation's space program. It provides a coherent
strategy for supporting and strengthening U.S. space launch capability to meet
the needs of the civilian, national security, and commercial sectors.

Challenges to Improving Space Transportation

The previous Administration committed itself to building a new expendable
launch vehicle through a joint NASA-DOD program. In the current budget
environment, and in light of emerging technical
advances in reusable launch vehicles, we have concluded that continuing
such an approach would neither be affordable nor effective.

As persons familiar with space transportation technology will readily attest,
there is no shortage of innovative ideas for improving space launch systems.
Ideas range from evolving expendable vehicles and shuttle upgrades to single-
stage-to-orbit concepts, air-breathing
systems, and even more exotic ideas. There is a shortage of government funds
to pursue all promising ideas, however, and budget limits continue to be a
painful but very necessary reality if we want to be fiscally responsible.

The U.S. space launch fleet is aging and costly. Major private sector
investments in expendable launch vehicles have helped maintain a U.S.
competitive presence in the international market, which has in turn helped hold
down launch costs for the U.S. government. Unfortunately, the private sector
can not bear the full burden of improving U.S. space launch systems alone.
Growing foreign competition, now including Russia and China, has cut into the
market share of U.S. firms and declining defense budgets have contributed to
significant overcapacity in traditional expendable launch vehicles. The
continuing downsizing and consolidation we have seen in the defense industry
has included major space launch manufacturers as well.

Looking ahead, we expect government spending for space to remain relatively
constant while the commercial space sector demand grows. New commercial
opportunities, such as mobile satellite communications, direct audio
broadcasts, remote sensing, and satellite-based
navigation systems underscore the importance of space to the emerging global
information infrastructure. These information-driven
industries will be a cornerstone of U.S. competitiveness for decades to come,
and dependable, affordable access to space will be crucial to U.S. economic
interests. In light of this, commercial requirements will be a necessary and
integral part of planning any successful next generation launch system.

In a recent study by NASA, six U.S. aerospace firms came together to assess the
potential markets that could emerge as a result of lower cost access to space.
In their conclusion, they made an important observation that I believe is
consistent with the Administration's new space transportation policy:

"The future space transportation system selected must be responsive to
commercial user requirements in addition to those of government users. While
low operating cost is fundamental, other parameters, such as launch
dependability, higher reliability, very short booking time, and user
friendliness, are of equal importance....Unless the next space transportation
system satisfies these needs, that system will not be widely used
commercially."

And I might add, that would mean higher costs for the U.S. government as it
seeks to maintain access to space for national security, public safety, and
scientific missions.

Assigning Clear Roles and Responsibilities

The new policy establishes roles and responsibilities for the chief agencies -
NASA and DOD - by clearly assigning each agency a unique lead role,
reflecting its particular
capabilities and resources. The DOD will be the lead agency for modernizing and
evolving current ELV systems. NASA will be the lead agency for technology
development and demonstration of next-generation reusable launch systems,
such as the single-stage-to-orbit concept.

NASA will be pushing the cutting edge of technology, focusing its investments
on the development and demonstration of a next generation reusable system. The
policy calls for a decision to be made no later than December 1996 on whether
to proceed with a sub-scale flight test to prove the concept of single-
stage-to-orbit. The goal of this effort is to support a decision by the
end of the decade on the development of an operational next generation
reusable launch system.

It is envisioned that the private sector could have a significant role in
managing the development and operation of a new reusable space transportation
system. In anticipation of this role, NASA will actively involve the private
sector in planning and evaluating its launch technology activities. This means
doing business in a new way in space launch - especially in involving the
private sector in defining system requirements. We
are actively addressing the issue of how this government/industry partnership
should be structured.

DOD will be the lead agency for modernization and evolution of our current
expendable launch vehicle fleet, taking prudent cost-effective
measures to improve performance, reduce costs and increase reliability to
support national needs. In doing so, the DOD will factor in the needs of the
commercial space launch industry, with a view towards keeping America
competitive in the global launch services market.

The objective of DOD's effort to improve and evolve current ELVs is to reduce
costs while improving reliability, operability, responsiveness, and safety.
Consistent with mission requirements, the DOD will cooperate with civil and
commercial sectors to evolve satellite, payload, and launch vehicle needs to
achieve the most cost-effective
and affordable combinations. The U.S. launch industry has similar interests
with the U.S. satellite industry in this regard. Both require stable,
consistent government policies, common standards, and both benefit from the
success of the other.

A closer partnership between DOD and private industry is a smart idea for both
parties. The Department of Defense is conducting an important, far-ranging
effort to reform defense procurement and manage a downsizing defense industrial
base to both cut unnecessary costs and retain crucial industrial capabilities.
To the extent the United States has a more commercially competitive space
launch industry, this can reduce the costs of national security launches,
maintain a skilled work force without using scarce DOD dollars, and even deter
the spread of ballistic missile technology that might happen under the guise of
commercial ventures.

Thus, the policy recognizes the critical role that the private sector plays in
space transportation and sends a strong signal to business that the government
wants to pursue our national goals in partnership with industry. The
Departments of Transportation and Commerce are specifically tasked with the job
of identifying promising approaches for government-
industry
partnerships and ensuring these opportunities are factored into the NASA and
DOD efforts. These Departments will also be responsible for assuring that the
needs of the commercial launch sector are taken into account as NASA and DOD
implement the policy. The National Science and Technology Council will monitor
policy implementation in line with overall policy objectives.

We see many opportunities for innovative arrangements between the public and
private sectors. I should add that these arrangements are not the sole
province of the Federal government, but that State and local governments are
encouraged to participate as well. Local regulatory and tax relief, special
trade zones, and State support for commercial space facilities could all be
part of innovative arrangements to improve the competitiveness of U.S. space
industries.

We believe these activities are only the forerunners of a new era in
government-industry cooperation in the space transportation arena. The big
payoff will be the design, development, demonstration, and production of
low-cost, reusable space transportation systems that not only meet the
government's civil and national security needs, but can be fully commercialized
and used competitively by the U.S. space launch industry. In this way, the
government should become just another customer of a robust, internationally
competitive U.S. launch industry.

Let me now address another area where we are breaking new ground. The world
has changed dramatically in the last few years. This is no more apparent than
in the new relations the United States is forging with Russia as exemplified by
its participation in the International Space Station. As a result of changes
in the world situation, the U.S. Government will seek to take advantage of
foreign know-how and hardware in upgrading U.S. space transportation systems
and developing next generation space transportation systems. Such activities
will be conducted in a manner consistent with U.S. obligations under the
Missile Technology Control Regime and with due consideration given to
dependence on foreign sources and national security. Simply put, we want U.S.
industry to be able to acquire and apply foreign technology where it is clearly
beneficial to improving U.S. space transportation.

I should also make it clear that there has been no change to the
long-standing policy that U.S. Government payloads will be launched only
on space launch vehicles manufactured in the United States unless
exempted by action of the
President. The space transportation policy signed by the President
specifically directs that U.S. government agencies shall purchase commercially
available U.S. space transportation products and services that meet mission
requirements to the fullest extent feasible. Furthermore, agencies are not to
conduct activities with commercial applications that preclude or deter
commercial space activities, except for reasons of national security or public
safety.

In that spirit, the Administration's policy also speaks to the use of excess
U.S. ballistic missile assets. Such assets that will be decommissioned under
the START agreements shall either be retained for government use or destroyed.
These assets may be used within the U.S. Government for any purpose except to
launch payloads to orbit. Exemptions may be granted on a case-by-case
basis when the following conditions are met:

(a) The payload supports the sponsoring agency's mission;

(b) The use of excess ballistic missile assets is consistent with
international obligations, including MTCR guidelines and the START agreements;
and

(c) The sponsoring agency must certify that such use of excess ballistic
missile assets results in a cost savings to the U.S. Government relative to the
use of available commercial launch services that would also meet mission
requirements, including performance, schedule, and risk.

Thus engineering tests and suborbital flight experiments are allowed, but
orbital flights which may compete with private sector providers would have to
satisfy some tough criteria.

We believe that these criteria are clear and reasonable and that they provide
sufficient flexibility to protect government interests while continuing to
encourage private sector investment in new space transportation systems. If
converting ballistic missiles to space launch vehicles can be done in a manner
that saves money for the government, this policy will still allow us to take
advantage of those savings.

Finally, the Administration's space transportation policy addresses the
important issue of trade in commercial launch services. The bulk of the policy
statement necessarily addresses technology and organizational issues, but a
comprehensive approach to space transportation necessarily requires attention
to the international marketplace. A company may have the best technology in
the world and still be uncompetitive due to unfair trade practices. On the
other hand, the fairest rules won't protect a company which does not
offer world-class products and services at a competitive price.

In pursuit of free and fair trade, the U.S. Government will seek to negotiate
and implement international agreements that define trade principles for
commercial space launch services, limit certain types of direct government
supports and unfair practices in international markets, and establish criteria
regarding participation by space launch industries in countries transitioning
from non-market economies.

The United States has entered into a launch trade agreement with Russia and is
considering entering into one with China after the current one expires at the
end of 1994. We are closely monitoring the Russian agreement and have begun
discussions with the Chinese. Let me just say that agreements to which the
United States is a party must be in conformity with U.S. obligations under arms
control agreements, nonproliferation policies, U.S. technology transfer
policies, and U.S. policies regarding observance of the Guidelines and Annex of
the Missile Technology Control Regime. Any agreement we enter will have an
effective means of enforcement and must not constrain the ability of the United
States to take any action consistent with U.S. laws and regulations.

Goals for Effective Implementation

Access to space is important not only to traditional civil, national security,
and commercial users, but key to our ability to use space to better understand
our environment, to compete in information-driven
industries, cooperate with other nations, and ensure public safety. The
Administration's policy is both practical in its focus on improving existing
ELVs and visionary in laying the basis for next generation reusable space
launchers. We have recognized the growing importance of commercial interests
and the changed international environment. While recognizing that budget
constraints mean that the government is not able to do all that it might like,
enhancing the productivity of our space transportation fleet promises to be a
high leverage investment.

The Administration's policy on space transportation is a comprehensive one that
speaks to a full range of concerns: R&D, acquisition, trade and most
importantly, clear agency responsibilities. Effective implementation of the
policy will require partnership between government and industry and also within
the government: in particular, between Administration and the Congress. I hope
we will be able to work closely and effectively together to ensure this
nation's space transportation capabilities are second to none.